ch9 - ch9 Student: _ 1. The most desirable combination of...

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ch9 Student: ___________________________________________________________________________ 1. The most desirable combination of output attainable with available resources, technology and social values is known as the: A. Economic choice of output. B. Efficient choice of production. C. Preferred output choice. D. Optimal mix of output. 2. If market prices and sales are used to signal desired output, then the optimal mix of output is determined by: A. The market mechanism. B. The political process. C. The Federal Reserve System. D. Government intervention. 3. Which of the following is an economic justification for a policy of laissez-faire? A. The existence of externalities. B. The free-rider dilemma. C. The efficiency of the market mechanism. D. Public goods. 4. In a market economy, producers will produce the goods and services that: A. Are least expensive to produce. B. Consumers need the most. C. Consumers demand. D. The government finds most beneficial. 5. Market failure occurs when: A. Market prices signal producers to produce the optimal mix of output. B. The economy produces at a point on the production possibilities curve. C. Producers supply the goods that earn the greatest profit. D. An imperfection in the market mechanism prevents an optimal outcome. 6. Market failure means that the economy is definitely producing: A. A suboptimal mix of output. B. At a point beyond the production possibilities curve. C. At a point inside the production possibilities curve. D. Zero output. 7. Market failure implies that a policy of laissez-faire: A. Leads the economy to a point beyond the production possibilities curve. B. Leads the economy to an undesirable point on the production possibilities curve. C. Is superior to government intervention. D. Causes government failure. 8. Which of the following does not explain why the market sometimes fails to produce the optimal mix of output? A. Some producers have market power. B. Public goods can have free-riders. C. Private goods cannot be consumed jointly. D. There are externalities associated with production.
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9. The optimal mix of output is: A. the most desirable combination of output attainable with existing resources, technology and social values. B. an attempt to compare the real worth rather than the market values to various goods and services. C. an exercise to determine if it is better to reduce government expenditures or reduce taxes. D. the most desirable level of the distribution of income. 10. The tendency for the market to under produce public goods and overproduce private goods results from: A. the law of diminishing returns. B. the fact that people are reluctant to buy what they can get free. C. public goods are not as important as private goods. D. the law of conservation of matter and energy.
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ch9 - ch9 Student: _ 1. The most desirable combination of...

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